image
Want to see step-by-step how to get your first deal?
Get Updates!

Some of My Old House Flipping Notes

Home » Blog » Learn » Flipping Houses » Some of My Old House Flipping Notes

The other day I found a file on my computer that I hadn’t opened in a while. The name of the file is ‘REI Notes’ and it’s where I stashed pieces of information that I found worth remembering over the last 10 or so years.

After looking through it a little, I realized that there were some really good notes that I could share with all of you. This post has some of what I thought were worthy of sharing.

Enjoy.

Wholesaling

From my notes on wholesaling houses:

The most effective way for finding buyers are handwritten signs that are placed in the neighborhood where the property is located. Second to that is calling landlords in the area and asking them if they are looking for more properties (you can get their phone numbers off of “For Rent” signs).

Searching MLS For Motivation

Words Used For Searching For Motivation:
foreclosure | preforeclosure | motivated | “bank owned” | sacrifice | investment | rental | “bring all offers” | “as is” | investor | transferred | “must sell” | moving | “out of town” | handyman | retiring | tenant | distressed | bankruptcy | divorce | desperate | potential | “make an offer” | “short sale” | “needs updating” | fire | mold

My MAO formula for Rentals

Rentals MAO = (price where monthly rent is at least 2.2% of total price+repairs)

Yes, I want them cheap! 🙂

Contractors

Here are some notes on working with contractors during a house flip.

Only pay for work that has been completely finished. No matter what they claim or say.

“You know I am not going anywhere” always means they are going to split with your money.

When I have a reasonable amount to pay for a job, I need to stick to my guns unless they can convince me otherwise.

Be nice – compliment workers to motivate them.
Incentives Instead Of Penalties – Give incentives for getting done early rather than penalties for being late. They will work harder to please you rather than get mad for being penalized and trying to do everything in their power to get you to no penalize them. Just make sure they don’t except it when they finish early or not…tends to be a problem.

Excerpt from Four Hour Work Week

I had a lot of excerpts from books I’d read, but this one stood out and I find it absolutely spot on. This is from The 4-Hour Workweek By Timothy Ferriss.

Money Alone Is Not the Solution
There is much to be said for the power of money as currency (I’m a fan myself), but adding more of it just isn’t the answer as often as we’d like to think. In part, it’s laziness. “If only I had more money” is the easiest way to postpone the intense self-examination and decision-making necessary to create a life of enjoyment – now and not later. By using money as the scapegoat and work as our all-consuming routine, we are able to conveniently disallow ourselves the time to do otherwise: “John, I’d love to talk about the gaping void I feel in my life, the hopelessness that hits me like a punch in the eye every time I start my computer in the morning, but I have so much work to do! I’ve got at least three hours of unimportant e-mail to reply to before calling prospects who said ‘no’ yesterday. Gotta run!”
Busy yourself with the routine of the money wheel, pretend it’s the fix-all, and you artfully create a constant distraction that prevents you from seeing just how pointless it is. Deep down, you know it’s all an illusion, but with everyone participating in the same game of make-believe, it’s easy to forget. The problem is more than money.

Excerpt from The Science of Getting Rich

Here is another excerpt from a book that I think everyone should print and stick on their computer monitor.

This one is from The Science of Getting Rich (1912) By Wallace Wattles

Stay on the creative plane rather than the competitive plane. No need to compete and have someone lose for your own gain. “What I want for myself, I want for everybody.”

You can find more books that I like a lot on the Flipping Houses Resources page.

What about you?

Do you have any notes that you’d like to share? I hope you do. Just mention them in the comments below and I’ll consider you a great friend. Thanks.

Danny
Google+

[fj_optin type=”random”]

  • 50
  •  
  •  
  •  
  •  
  •  
  •   

Share

Comments (13)

  • Mark ferguson

    Hi Danny, do you have many rentals that meet your criteria in your area? I thought I had scent returns an cash flow, but its not even close to 2.2% of purchase + repairs. Do you have many long term rentals? I strongly feel long term rentals are what will help me retire early an flipping is a way to get cash to buy more long term rentals.

    • Danny Johnson

      I have several. They are roughly between 2.0 and 2.2%. Granted they’re not in the best areas of town, but they’re definitely not in war zones. You can get these numbers in some of the lower end areas. It might not be easy, but it is possible.

      We pick up rentals when we get a lead where the house has already had a tenant for a long time and no repairs or minor repairs are needed. Then there are a couple that ended up as rentals out of necessity…

      Your strategy is a good one.

      • Mark Ferguson

        There may be some rentals in the very low end that would come close to that rule, but I think they would still fall short in my area. That’s tremendous cash flow if they don’t take too much work.

        • Danny Johnson

          Yeah. I don’t get a lot of them. It makes it worthwhile for us to take on a rental though if we can get it to fit that formula. I’ll admit that it’s not a formula that many will find doable if you want to get a lot of deals.

  • @buyhousescheap

    I was looking at some of your old notes on determining offer price(ARV x .65 – repairs). Being that the market is shifting somewhat do you still follow the .65 or are you adjusting your percentage to the recent rise in home prices?

    • Mark Ferguson

      I would think the rise in value would be calculated into the equation since the ARV would be rising as the market rises.

    • Danny Johnson

      I still try to go with 65%. If the house doesn’t need much in the way of repair and/or the days on the market for the area are low, I will probably go up to closer to 70%. Competition has become pretty crazy lately.

      • Sharon Hiebing

        I don’t know if you’ve already written a blog like this (I’m almost all the way through your website 🙂 ), but would love to know how you are changing your strategies in this market, with more competition and rising home values. I know that would be of great interest to me, and probably others as well. Thanks!

        • Danny Johnson

          That’s a good idea for a new post. I will consider that. I haven’t changed too much right now. The biggest thing is probably wholesaling more (more investors wanting to buy deals at higher and higher prices).

  • Brooks Conkle

    Great notes!
    The 4HWW is my favorite book of the last 3 years. One of the only books I actually go back to for reference.
    I’ve never heard the 2.2% rent/totalinvestment formula — but I like it — quick and easy.
    I was going to say the same thing — for us, that’s Section 8 type properties that rent for $650-$700 that we can be all in for $28-30k — higher returns on these — and these are decently common in my marketplace, even in ‘desirable’ investment areas.
    Thanks for sharing!

    • Danny Johnson

      Hey Brooks. Always good to hear from you.

      Yeah, the 2.2% formula is something I calculated based on my strategy. I don’t usually shoot for immediately cash flow but rather want to be able to pay off the underlying loan for the property as soon as possible. So I calculated something that would typically give me a very short loan which had payments that roughly matched the rents I would receive.

  • Glenn Espinosa

    Great Site Danny!

    Are you sure the quality of these previous flips werent dictated by the market at that time?

    Before the bubble burst people could sell anything at a mark up so to actually do a quality rehab like the ones you are churning out now would have hurt your bottom line.

    Just wondering,

    Glenn

    • Danny Johnson

      Hey Glenn.

      I’d like to use that excuse, and I’m sure it had a little to do with it. It really did have to do more with inexperience and more so with just being busy with many deals at a time and not having the ability to spend too much time on each house. When you have several rehabs going on at a time and are still marketing, looking at, and making offers on houses (not to mention selling the fixed-up) ones, it can be difficult to manage everything.

Speak Your Mind

Latest Posts

34 Weeks Flipping Houses